Pacific

The proposed merger of Anadarko Petroleum and Union PacificResources moved forward yesterday when the U.S. Federal TradeCommission (FTC) granted early termination of the statutory waitingperiod required under the Hart-Scott-Rodino Anti-Trust ImprovementsAct. Completion of the merger still is subject to the approval ofthe shareholders of both companies and satisfaction of othercustomary conditions. Under the agreement, which was unanimouslyapproved by each company’s board of directors, UPR shareholderswill receive 0.455 Anadarko common shares for each UPR common sharethey own. The offer is worth about $5.6 billion. Anadarko will alsotake on $2.6 billion in long-term debt from UPR. Closing isexpected in July. UPR will become a wholly-owned subsidiary ofHouston-based Anadarko. The purchase more than doubles Anadarko’sNorth American gas reserves from 2.5 Tcf to 5.8 Tcf. The increasemoves the company from the 13th largest company in terms of NorthAmerican gas reserves to fifth. The increase of production is evenmore pronounced, as Anadarko will go from 170 Bcf/year (20th place)by itself to 634 Bcf/year (sixth place).

Developers of what at one time was California’s first merchantpower plant proposal are gearing up for more concentrated effortsto develop natural gas deals and power marketing efforts, assumingthey get final federal government environmental okays for their$350 million, 700 MW High Desert generation plant by mid-summer.Although delayed more than two years, the project last week (May 3)gained its long-sought state approval for the plant from theCalifornia Energy Commission (CEC).

Responding to regulatory and industry warnings of potentialpower outages this summer, Pacific Gas and Electric Co., SanFrancisco, has begun offering its largest customers payments forvoluntarily curtailing at least 20% of their loads during peaksummer days. The large combination utility covering the northernhalf of California is targeting its 450 largest customers and arelatively few small businesses to obtain up to 500 MW of savingsin a given peak hour.

Pacific Gas & Electric issued a customer-specific OFO totake effect today. As of Tuesday morning the utility was projectingabove-target linepack levels through Friday.

After having a customer-specific OFO in effect for Wednesdayonly, Pacific Gas & Electric issued a new customer-specific OFOfor Saturday and was projecting above-target linepack Saturdaythrough today. An unplanned outage prompted Transwestern toallocate San Juan Lateral volumes for the Intraday 1 cycle Friday,affecting 18 points.

Pacific Gas & Electric issued a systemwide high-inventoryOFO for today. While the tolerance for positive daily imbalances isfairly stringent at 3%, the non-compliance penalty is light at 25cents/Dth. As of Thursday PG&E was projecting above-targetlinepack through Sunday.

Pacific Gas and Electric Co. and Southern California Edison Co.received state regulatory approval to extend their participation inthe California Power Exchange’s (Cal-PX’s) expanded block-forwardmarket for electricity, despite some concerns by retail marketersthat the utilities might subject their bundled customers toincreased risks.

Pacific Gas & Electric ended a high-inventory OFO Saturdayafter it had been in effect for three days.

Despite projecting linepack within its operating limits targetrange, Pacific Gas & Electric extended a high-inventory OFO (seeDaily GPI, March 15 and March 16) into its third day today butloosened the tolerance for positive imbalances slightly from 1% to2%. The utility expects linepack to exceed its upper limit targetagain Saturday.